Trump administration may leave biofuel reform to lawmakers: Perdue

NEW YORK (Reuters) - U.S. Agriculture Secretary Sonny Perdue signaled on Tuesday that the Trump administration was backing off efforts to make major changes to the nation’s biofuels program and may leave it to lawmakers to settle the divisive issue instead.

U.S. Secretary of Agriculture Sonny Perdue speaks at an event to celebrate the re-introduction of American beef imports to China, in Beijing, China June 30, 2017. REUTERS/Mark Schiefelbein/Pool

The White House spent the last few weeks trying to negotiate a heated dispute between the corn and oil industries, key constituencies for President Donald Trump, over the future of the Renewable Fuel Program - a regulation that requires refiners to blend increasing volumes of biofuels like ethanol into the nation’s fuel.

The RFS has created a lucrative market for Midwest corn farmers, but refiners who must prove compliance by earning or purchasing blending credits say it is too costly.

Perdue said he and U.S. Environmental Protection Agency chief Scott Pruitt sent the White House a list of options, but it was unclear if Trump would ultimately implement changes to the RFS on the executive level, as has been widely expected, or whether it would instead leave reforms to Congress.

“The White House is trying to determine whether they need to make a call on a decision, or allow Congress to do it,” Perdue said.

Perdue’s comments marked the first time the administration has signaled a willingness to let lawmakers take control, said Stephen Brown, a lobbyist for refinery Andeavor, which has supported the legislative pathway.

“A handful of merchant refiners have continued to agitate for any relief, even regulatory that could prove to be fleeting,” Brown said. “They are so removed from where the rest of the refining sector as to be considered essentially irrelevant at this point.”

Perdue did say the Trump administration can make the nation’s biofuel laws more affordable for oil refiners without putting a cap on prices for the tradable credits at the center of the program.

“We’re hoping that we can resolve it where we will not see RINs capped,” Perdue said, referring to the name of the credits. He said he instead favored expanding high ethanol blend gasoline sales year round, something he said “would increase the RIN availability, guiding RIN prices down.”

Perdue made the comments during a speech at the National Press Club in Washington. A video of the speech was provided to Reuters.

Reports that the Trump administration was backing off its plans to enforce changes to the program caused ethanol credit prices to rise by 3 cents, coming off a one-year low of 38 cents earlier in the day, traders said. The prices have plummeted by 40 percent in recent weeks amid political uncertainty in Washington.

The efforts by the White House have drawn sharp criticism from ethanol producers and corn-state lawmakers, who say Trump pledged to preserve the RFS on the campaign trail.

The Republican president has expressed support in the past for capping RIN prices in exchange for allowing sales of higher ethanol blends of gasoline all year round.

The Fueling American Jobs Coalition, a group of merchant refiners, said it remained optimistic that Trump would eventually reach a compromise that contained credit costs.

“Those who make money off of RINs – a windfall never intended when the program was established – obviously see it differently but haven’t exactly been in the relevant meetings,” the coalition said in a statement.